Could China provide a silver lining as Brexit uncertainty continues?

China's worsening problems with African swine fever could provide some relief for pig producers in the event of a Brexit no deal, according to NPA chairman Richard Lister.

Commenting in the April issue of Pig World, Richard Lister said there had been a general ‘tightening of belts’, including within his own business, due to a combination of the Brexit uncertainty and recent difficult market conditions.

Although he remains optimistic it will be averted, he said a no deal would be a ‘frightening prospect’ for the pig sector, particularly with reduced export access to the EU.

“The latest figures showed pork exports were worth £498 million last year, which equates to £50 for each pig slaughtered. The big question is how much of that trade we would maintain,” he said.

But he cited the ‘hole’ in Chinese pig production and likely impact of higher Chinese demand on the global market as cause for optimism. “There should be some good prices as the year goes on and that would help alleviate some of the potential downsides of Brexit and keep people producing pigs in this time of uncertainty,” he said.

China ASF woes

Experts are predicting a massive shortfall in Chinese production this year, resulting in vastly increased import demand, as the true scale of the ASF outbreak becomes evident.

Official figures from China put the numbers animals of slaughtered so far at around one million, with 113 confirmed cases at the end of March. However, there are growing suggestions from within the industry that the outbreak is being vastly under-reported.

Officials in Shandong province, a major pig production area, said stocks of breeding pigs fell more than 40% between August and February. Yet it has only reported one case.

China’s agriculture ministry has published figures showing the country’s pig herd was down 16.6% in February from a year earlier, including 5.4% since January, with the sow herd down 19.1% year-on-year. Live pig prices hit a 14-month high in mid-March.

There is little sign of the outbreak being brought under control and China, with a population of 1.4 billion eating around 55 million tonnes of pigmeat a year, has been forced to look to the global market.

EU fresh and frozen pork exports to China were up 18% year-on-year in January, with anecdotal reports that extra Chinese demand is helping to firm up prices. UK pork exports to China were also 72% year-on-year in January to 4,500 tonnes. US hog futures soared to record levels after China imported 24,000 tonnes of pork from the US in a week in mid-March, despite 70% tariffs.

Oscar Tjakra, a director of food and agribusiness research at Rabobank, told a conference in China pork production will fall by up to 20% in 2019, resulting in import volumes doubling to 2 million tonnes.

The US Department of Agriculture has forecast that China’s total pig numbers will drop by 13% to 374 million in 2019 and expects a more modest, but still significant 28% hike in imports.

Whatever the final figure, the impact on the global market is already being felt and is likely to continue for some time.

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The National Pig Association is the representative trade association for British commercial pig producers and is allied to the NFU and represents the pig interests of NFU members. National Pig Association, Agriculture House, Stoneleigh Park, Warwickshire CV8 2TZ. Registered in England No. 3859242.